There are a number of ways water can get in the oil, the exhaust manifolds are a common cause (although having used the OMC BATWINGS for 15 years, three different sets, I never had a set that leaked and the last 2 I tested with acetone).
Take off the manifolds and look in the exhaust ports. That will tell you if the water came in that way but also water in a cyl, coming from a cracked head, block or blown HG can also put water in a cyl. The other cause is a rotted out intake manifold, the front section that has the water passages to both heads and in the center for the thermostat, can put water right in the cam valley and will show up in the oil right away.
On my engine I had a bad overheat about 4 summers ago. Ran fine till the end of last summer, then had reluctant starting, then found water in cyl #2, a bit in cyl #1. Took off batwings, tested, no leaks. Put on my other set, same out come. Blew out water, fogged engine, etc, etc. Did comp test, normal believe it or not. Found that exhaust gases were getting into the cooling water, rigged up a way to test this (as you would see bubbles in the recovery tank of a vehicle with a normal closed cooling system). At that point to me seemed as if it was a cracked head, or head gasket. Took it all apart. Found both head gaskets blown on the front 2 cyls, intake fine, heads were checked at a machine shop. They found cracks in the center cyl exhaust seats, but there was no water in those cyls. So I do think in some cases you can get water in the oil via a blown HG. It may not be the most common way but it does happen.
BTW, I think the Batwing leaking issue is more common with the Merc version, than the OMC version. It may be that some bad batches were cast, but like I said, I never had that problem and this is in 100% salt water use.....
